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Pensions Fund Committee - Tuesday 10th December 2024 4.00 pm

December 10, 2024 View on council website
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Summary

The meeting was scheduled to discuss a number of policy documents, the performance of the Pensions Service and to receive an update on the Northamptonshire Pension Fund's (NPF) progress on Pension Dashboards and the ACCESS asset pool. It was also scheduled to consider whether to approve a number of new admitted bodies to the NPF and to discuss the Fund's valuation and accounts, some of these discussions were scheduled to be held in private.

Admissions and Bulk Transfers Policy

The report pack included the Admissions and Bulk Transfers policy covering report, which asked the committee to approve the Admissions and Bulk Transfers policy. The policy was reviewed by officers and the main change has been to make pass-through admissions the default approach for managing the risk of transferee admission bodies. The policy sets out the Fund’s requirements for entry, policies on how to allocate assets and liabilities when a new employer joins, policies on how to set employer contribution rates and how to manage employer risk. It also describes the Fund’s policy regarding how to deal with employers that leave the fund and the Fund's approach to receiving and paying bulk transfers of liabilities.

Employer Admissions and Cessations

The report pack included the Employer Admissions and Cessations Report, which asked the committee to approve the admission of three new admitted bodies to the NPF. These included:

  • Atlas FM Payroll Limited providing cleaning services at Rowan Gate Primary School.
  • KGB Cleaning South West Limited providing cleaning services at Chenderit School.
  • Pathfinder Legal Services Limited providing legal services at Northamptonshire Childrens Trust. It was scheduled to be discussed that all three admissions are “pass-through” admissions where the assets and liabilities are retained by the awarding authority, and that for this reason there is no additional risk to the Fund. The report also stated that Pathfinder Legal Services Limited's contract had already ended and that it had ceased to be an admitted body. The report also asked the committee to note the cessation of five admission agreements. These were:
  • Kingswood Education Catering Limited, providing catering services at Hunsbury Park Primary School. This cessation was due to the last active member leaving the employer.
  • Miquill (South) Limited, providing catering services at Whitefriars Primary School. This cessation was due to the end of their contract.
  • Pathfinder Legal Services Limited, providing legal services at Northamptonshire Childrens Trust. This cessation was due to the end of their contract.
  • Rockingham Forest Trust. This cessation was due to the last active member leaving the employer. The report stated that a funding surplus of £69,000 has been identified and that the process has started to determine the value of the exit credit (which may be nil) to be paid to the exiting employer.
  • Taylor Shaw Limited, providing catering services at The Ferrers School for the Meridian Trust. This cessation was due to the last active member leaving the employer.

Anti-Fraud and Corruption Policy

The report pack contained the Anti-Fraud and Corruption Policy Cover Report and the Anti-Fraud and Corruption Policy which was scheduled to be discussed and approved by the committee. The report stated that the Local Pension Board had already reviewed the policy at its meeting on 24 October 2024. It proposed four changes to the policy related to preventing fraud. These included expanding the annual proof of existence checks of pensioner members to include all members over 95 years old and requiring members with no fixed abode to provide proof of a previous address and photographic identification. The policy document itself states that:

The administering authority promotes a zero-tolerance approach towards fraud, corruption, and other malpractice for personal gain. Dishonesty, lack of integrity avoidance of controls and failure to comply with agreed policies will not be tolerated.

The report also described some upcoming developments that are likely to shape the policy at its next review.

Northamptonshire Pension Fund Committee Effectiveness Review

The report pack included the Effectiveness Review Cover Report and the Northamptonshire - Effectiveness Questionnaire responses, which were scheduled to be discussed by the committee. The report describes a review of the effectiveness of the Pension Committee that was conducted in July 2024. The review consisted of a 52 question survey, completed by 9 of the 13 committee members. The survey responses suggested that there is a lack of communication between the committee and the board. The committee was scheduled to discuss how to improve this, with ideas including increased joint training for board and committee members. The report also stated that an independent review of the governance arrangements for the Northamptonshire Pension Fund is scheduled to be conducted during the 2025/26 financial year.

Business Plan update

The report pack included the NPF Business Plan Update report and the Climate Action plan, which was scheduled to be discussed by the committee. The report provided an update of progress on the NPF's activities that were listed in the Annual Business Plan for 2024-25. All activities were listed as green, except for four which were listed as amber. The report explains that:

The EDI definition and Fund Policy has been delayed due to conflicting priorities within the Service, some of which were statutory obligations that could not be rescheduled. The Policy was due to be presented for consideration at this meeting but will now be presented in March 2025.

It also states that, while progress within year has been positive, the processing of undecided leaver records is being held at amber due to the conflicting project priorities within the Service. The report also states that McCloud remedy rectification is now rated amber due to complexities with record preparation activities resulting from late issuance of statutory guidance. The report also included a note that the procurement of a new address and mortality screening service from the National LGPS framework is on target and that officers are currently assessing the suppliers to establish which would be the most suitable supplier based on service needs. The report states that the variation agreement with Heywood Pension Technologies Ltd to provide an Integrated Service Provider to enable connection to the Pension Dashboard ecosystem has now been signed and sealed and came into force on 1 October 2024. It also included an update on progress to the Climate Action plan stating that In November, the ISC approved decarbonisation targets for both the corporate bonds portfolio and the combined listed equity and bonds portfolio, aligning these targets with the previously established decarbonisation goals for listed equity. The report also included an update on progress made to the Fund's website, stating that:

Since the last update, we’ve uploaded the content to the website and have now entered the testing stage ready for a soft launch by the end of the calendar year and a wider launch in the new year.

Governance and Compliance Report

The report pack included the Governance and Compliance Report and the Training plan which was scheduled to be discussed by the committee. The report provided an update on progress on the NPF's activities that were listed in the Annual Business Plan for 2024-25. It highlighted the recent changes made by the Ministry of Housing, Communities and Local Government to the requirement for Local Government Pension Schemes to include estimated calculations relating to the McCloud remedy in members’ annual benefit statements. It stated that the fund was now compliant with regard to 2023/24 benefit statements and there were no breaches. It also explained that a re-assessment would be conducted next year. The report also mentioned that interviews had taken place the previous week for the recently advertised Local Pension Board vacancy and that a report on the LGPS: Fit for the future consultation would be presented for discussion in the ACCESS agenda item. The report also included a reminder that the deadline for mandatory training modules for board and committee members had now passed, stating that any training not undertaken has been reflected in the Fund’s Risk Register. The report also lists a number of upcoming conferences and events which were identified as useful for board and committee members to attend. These were the LAPFF Annual Conference from 4 - 6 December 2024, the PLSA Local Authority Forum on 3 December 2024, the Local Government Association Governance Conference from 30-31 January 2025 and the LGC Investment Seminar from 26-28 March 2025.

Pensions Dashboard Update

The report pack included the Pensions Dashboards Update Report Dec 2024, which was scheduled to be discussed by the committee. The report provided an update on the NPF's progress in preparing to connect to the Pensions Dashboard infrastructure. It confirmed that:

The Fund remains on target to connect to the Pension Dashboards infrastructure by the 31 October 2025 as specified in guidance issued by the Department for Work and Pensions. Testing of the ISP console and matching data will be undertaken from January 2025.

It mentioned that the Fund would be required to establish links with its two AVC providers - Prudential and Standard Life - and explained the different approaches that each provider is taking to provide data to the Dashboard. The report explains that:

Prudential have confirmed that they will be adopting the ‘single source’ approach to providing members’ AVC data to the dashboard. Prudential will send the data to the Fund once per year to be entered onto the Fund’s administration system so that the AVC value data is displayed alongside the member’s LGPS benefits.

The report also explained that Standard Life are taking a ‘multiple source’ approach and explains that this:

means that Standard Life will send AVC data directly to the infrastructure. This data can be either ‘linked’ or ‘unlinked’ to the member’s main scheme benefits; Standard Life have yet to confirm their approach. ‘Unlinked’ would be less beneficial to the user’s experience of seeing all their benefits in one place, one of the fundamental design principles of Pensions Dashboards.

The report also included details of the budget for connecting to the Pensions Dashboard.

Administration Report

The report pack included the Administration Report and appendices which were scheduled to be discussed by the committee. The report provided an update on the performance of the NPF's Pensions Service and included performance against key performance indicators, details of the development of Customer Journey Key Performance Indicators and the timeliness of receipt of employee and employer pension contributions. The report identified that six out of the fourteen KPIs had not been met over the reporting period. Five of these KPIs were rated amber and one was rated red. It stated that:

The missed KPIs were primarily due to incorrect allocation and prioritisation of cases at the notification and checking stages, which involves team leaders verifying the accuracy of the information before it is sent to members. This issue has been addressed with the relevant team to prevent future occurrences.

It also explained that the red KPI on providing a maximum of one estimate of benefits to employees per year on request was due to the team currently focusing on working through the backlog that has been created. It was scheduled to be discussed that at the time of drafting, this backlog was expected to be cleared by the end of November. The report also stated that:

The Pensions Service is expecting a higher than normal volume of employer estimate requests over the coming months due to redundancy exercises at local authority employers within each Fund.

The report also confirmed that 100% of contributions had been received on time for August and September 2024. The report also provided information on breaches of the law and stated that There were no material breaches in the period. The report also listed and described the Internal Dispute Resolution Procedure cases that occurred during the reporting period. It concluded that:

Although all three Stage 1 IDRP cases involve AVCs, they differ in nature and complexity. For AVCs there is an extra process in place which involves interaction with the AVC providers at the appropriate time and additional options to be made by the member. Generally, in this area complaints are due to communications issues and timeliness to request payments. AVC processes are continuing to be reviewed and refined to prevent further issues.

The report also discussed the identification of a significant overpayment of £46,133.22, explaining that:

The issue has arisen due to conflicting information on the claim form. The team have been reminded to query any discrepancies ahead of benefits being finalised to avoid any incorrect payments being made.

Pension Fund Statement of Accounts 2023-24

The report pack included the Pension Fund Statement of Accounts 2023-24 report and appendices which were scheduled to be discussed by the committee. The report provided an update on the Final Statement of Accounts and on the audit findings report for the 2023-24 financial year. It explained that the financial statements had already been approved by the Audit and Governance Committee in November 2024 and confirmed that Grant Thornton's anticipated opinion on the financial statements will be unqualified. It also mentioned that there was one corrected misstatement of £6.6m identified during audit, due to estimates used for level 3 investments. The report also confirmed that There have also been a small number of disclosure adjustments required, these have been amended in the Accounts. It included a recommendation for management to:

ensure that there is a control in place to review the Custodian’s holdings report to ensure this is consistent with investment assets purchased.

and stated that this recommendation has been actioned. It also stated that the final cost of the audit was £136,158, compared to the proposed fee of £135,848 and that non-audit fees for IAS 19 assurance letters issued to employers is £14,000. The report also included the IT Audit Findings and the audit opinions and letters of representation for 2021-22 and 2022-23, ahead of the Government Backstop date of 13 December 2024. The IT Audit Findings included two recommendations for management. These were:

  • To define segregation of duty policies and processes within the Altair system, and to review user access rights. The report stated that:

The Pensions Officers identified in appendix A are members of the Systems Team who support the Pensions Systems Analysts and Team leader in resetting passwords and creating new users within Altair. It is accepted that Pensions Officers should not have the ability to create new users within Altair and so their powers will be restricted to password resets only. A wholesale review of all user access rights will be undertaken by 31 December 2024. New roles and responsibilities will be identified and documented as recommended.

  • That security event logs in Altair are reviewed on a regular basis. The report states that:

Activities deemed high risk (for example, significant payments associated with transfers out, retirement grants, and bank account changes) will be identified from the Altair activity log and reviewed by a member of the Pension Fund’s accounting team who do not have administrative access to the Altair database. This process will be in place from 1 October 2024 with high-risk activities reviewed monthly and documented accordingly. Any issues found within the monthly reviews will be investigated promptly and mitigating controls put in place to prevent re-occurrence.

The report confirmed that both audit opinions for 2021-22 and 2022-23 are unqualified and that the Pension Fund’s financial statements give a true and fair view of the financial position at the year ending 31 March 2022 and 2023.

General Code of Practice - Compliance with the expectations of the Pensions Regulator (TPR)

The report pack included the GCOP Cover Report and the Scorecard Assessment, which was scheduled to be discussed by the committee. The report provided an update on the compliance of the NPF against the General Code of Practice, which was introduced by The Pensions Regulator on 28 March 2024. The report explained that the code:

consolidated ten of the previous codes of practice into one including Code of Practice No.14.

It described the five partially met areas identified during the review and provided details of how they will be addressed to achieve full compliance.

Attendees

Profile image for Councillor Malcolm Longley
Councillor Malcolm Longley  Cabinet Member for Finance •  Conservative •  Braunston and Crick
Profile image for Councillor Charles Morton
Councillor Charles Morton  Conservative •  Long Buckby
Profile image for Councillor Phil Bignell
Councillor Phil Bignell  Conservative •  Campion
Profile image for Councillor Keith Holland-Delamere
Councillor Keith Holland-Delamere  Labour •  Blackthorn and Rectory Farm
Councillor Lloyd Bunday
Councillor Graham Lawman
Profile image for Councillor Jamie Lane
Councillor Jamie Lane  Conservative •  Boothville and Parklands
Profile image for CouncillorPeter Matten
CouncillorPeter Matten  Conservative •  Daventry North East
Profile image for Councillor Cathrine Russell
Councillor Cathrine Russell  Labour •  St. George
Robert Austin
Paul Wheeler
Andy Langford
Elnora Latchman
Mark Whitby
Michelle Oakensen
Cory Blose
Madalina Bratec
Ben Barlow
James Smith
Jeverly Findlay

Topics

No topics have been identified for this meeting yet.

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